Select balance sheet data for Bach, Inc. is presented below: Mar 31, 20XX Apr 30, 20XX Assets $116,000 $192,000 Liabilities 47,000 53,000 Common Stock 14,000 14,000 Bach did not pay any dividends during this period. What is the net income for April?

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Business

Guzman

17 January, 12:42

Select balance sheet data for Bach, Inc. is presented below: Mar 31, 20XX Apr 30, 20XX Assets $116,000 $192,000 Liabilities 47,000 53,000 Common Stock 14,000 14,000 Bach did not pay any dividends during this period. What is the net income for April?

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Cesar Stafford · Answer 1

The net income for the month of April is $70,000

Explanation:

By using the Accounting equation, we will determine the ending and beginning retained earnings is as:

The accounting equation is

Assets = Liabilities + Shareholder's equity

Assets = Liabilities + (Common Stock + Retained Earnings [RE])

$116,000 = $47,000 + ($14,000 + RE)

RE = $116,000 - $47,000 - $14,000

Beginning RE = $55,000

Computing ending RE as:

Ending RE = Assets - Liabilities - Common Stock

= $192,000 - $53,000 - $14,000

= $125,000

Now computing the Net Income as:

Beginning RE + Net Income (NI) = Ending Inventory

$55,000 + NI = $125,000

NI = $125,000 - $55,000

NI = 70,000